Posted on 11/20/2011 11:24:30 PM PST by bruinbirdman
Taxpayers will underwrite mortgages totalling hundreds of millions of pounds under plans to “unblock” the housing market and revive the flagging economy.
The Prime Minister and his deputy, Nick Clegg, will unveil proposals to help first-time buyers of new homes by carrying part of the risk of their mortgages.
They also propose subsidising the construction of 16,000 homes by giving £400 million of taxpayers’ money to property developers.
In a further move, ministers are working on a scheme under which billions of pounds of money in pension funds will be used to finance the construction of power stations, wind turbines and roads.
In the foreword to the Coalition’s new housing strategy, which is published today, Mr Cameron and Mr Clegg say that Britain has been “under-building”for decades and that a “radical and unashamedly ambitious strategy” is needed to shake up the housing market.
“The housing market is one of the biggest victims of the credit crunch: lenders won’t lend, so builders can’t build and buyers can’t buy,” they say in the report.
“That lack of confidence is visible in derelict building sites and endless 'For Sale’ signs.
“It is doing huge damage to our economy and our society, so it is right for government to step in and take bold action to unblock the market.”
The mortgage guarantee, the first time such a scheme has been attempted in the UK, will result in lenders providing loans with significantly lower deposits than the 20 per cent or more that is typically demanded. The taxpayer, however, could be liable for losses in the event that a home is repossessed.
The strategy also includes a proposal to double from £26,000 to £52,000 the discount available to council tenants wishing to buy their home.
There are plans to “build for growth”, with property companies
(Excerpt) Read more at telegraph.co.uk ...
Did we not just go through this with freddie and fannie....
sigh...
stupid is as stupid does, and it seems that the governments of the world, most of them, cannot get out of the business of growing by making the workers pay for those who do not.
EL
Of course, the law of "unintended consequences" soon kicked in. If you artificially reduce the cost of buying a home to the consumer, you are effectively putting more money into the housing market. More money sloshing around the system, chasing the same amount of commodity, inevitably means the cost of the commodity will increase. And of course it did. Housing costs in the UK spiraled. Which is why no one can afford to buy them now. And why more intervention like this is "needed".
The tragedy is that even if this "works" (and it probably will in the short term), the ultimate result will be even more expensive housing 5-10 years down the line.
bump
The Prime Minister says UK will also build 16,000 new houses by means of £400 million subsidy to developers.
yitbos
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